2019 CERT Report Supplemental Improper Payment Data

on Tuesday, 14 January 2020. All News Items | Case Management | Documentation | Coding

Fiscal Year 2019 Estimated Improper Payment Rates

In mid-November, CMS published a CMS.gov Fact Sheet detailing the estimated improper payment rates for CMS Programs for Fiscal Year (FY) 2019. Approximately 50,000 claims were sampled and included claims submitted from July 1, 2017 through June 30, 2018. The following tables highlights an improper payment rate compare of FY 2018 to FY 2019.

Medicare FFS (Part A and Part B) Improper Payment Rate Compare
 FY 2018FY 2019
Improper Payment Rate 8.12% 7.25%
Improper Payments $31.62B $28.91B

Audit findings are used to calculate a Medicare Fee-for-Service (FFS) program improper payment rate. “The CERT program considers any claim that was paid when it should have been denied or paid at another amount (including both overpayments and underpayments) to be an improper payment.”

CMS reminds the reader in the Fact Sheet that improper payment rates are not necessarily indicative of or are measures of fraud. Instead, improper payments are payments that did not meet statutory, regulatory, administrative, or other legally applicable requirements and may be overpayments or underpayments.”

Fiscal Year 2019 Supplemental Improper Payment Data

A month later on December 12, 2019, CMS released the Supplemental Improper Payment Data Report that delves into the details behind the final Improper Payment Rate and Improper Payments. This report includes a review of claims submitted from July 1, 2017 through June 30, 2018.

Common Causes of Improper Payments

Below is a table comparing the common causes of improper payments broken out by the type of error. The biggest shift from 2018 to 2019 was an increase in incorrect coding.  


Common Causes of Improper Payments Compare
 2017 Report2018 Report2019 Report
Insufficient Documentation 64.1% 58.0% 59.5%
Medical Necessity 17.5% 21.3% 18.7%
Incorrect Coding 13.1% 11.9% 13.7%
No Documentation 1.7% 2.6% 2.1%
Other 3.6% 6.3% 6.1%


“0 or 1 Day” LOS Claims Continued Outlier

The CERT Program has reported Projected Improper Payments by Length of Stay (LOS) since the 2014 Report. Unlike the past three years where the Improper Payment Rate dropped for “0 or 1 day” LOS claims, for 2019 the improper payment rate increased.  

Part A Inpatient PPS Length of Stay2016 Improper Payment Rate2017 Improper Payment Rate2018 Improper Payment Rate2019 Improper Payment Rate
Overall Part A (Hospital IPPS) 4.5% 4.4% 4.8% 4.2%
0 or 1 Day 18.6% 18.2% 17% 18.4%
2 Days 7.1% 5.1% 6.3% 5.0%
3 Days 4.5% 4.8% 5.0% 4.7%
4 Days 3.4% 3.3% 4.1% 3.5%
5 Days 2.9% 3.2% 4.4% 2.0%
More than 5 Days 2.7% 2.6% 2.8% 2.3%
Data Source: CERT Report Table B7

Compliance with Short StaysIn addition to the CERT, the two Beneficiary and Family Centered Care Quality Improvement Organizations (BFCC-QIOs) (KEPRO and LIVANTA) have historically been tasked with performing Short Stay Reviews.However, on May 8, 2019 BFCC-QIO Short Stay Reviews were stopped while CMS took action to procure a new BFCC-QIO contractor to perform Short Stay Reviews on a national basis. CMS anticipated issuing a contract award by the 3rd quarter of calendar year 2019. To date, CMS has yet to announce a contract awardee.In the meantime, have you tracked your short stay volume overall, by MS-DRG or Physician over time? Do you know if your hospital is an outlier? Where can you look to find these answers?  
PEPPEROne resource available to hospitals is the Short-Term Acute Care PEPPER (Program for Evaluating Payment Patterns Electronic Report). The PEPPER is made available to hospitals on a quarterly basis and compares your hospital to your state, MAC Jurisdiction and the nation. One-day Stays for Medical and Surgical MS-DRGs are two of the “Target Areas” at risk for improper payments included in this report.
The PEPPER provides the following suggested interventions for high One-day Stays Hospitals: “This could indicate that there are unnecessary admissions related to inappropriate use of admission screening criteria or outpatient observation. A sample of same- and/or one-day stay cases should be reviewed to determine if inpatient admission was necessary or if care could have been provided more efficiently on an outpatient basis (e.g., outpatient observation). Hospitals may generate data profiles to identify same- and/or one-day stays sorted by DRG, physician or admission source to assist in identification of any patterns related to same- and/or one-day stays. Hospitals may also wish to identify whether patients admitted for same- and/or one- day stays were treated in outpatient, outpatient observation or the emergency department for one or more nights prior to the inpatient admission. Hospitals should not review same- and/or one- day stays that are associated with procedures designated by CMS as “inpatient only.”RealTime Medicare Data Another source that can help assist you is our sister company, RealTime Medicare Data (RTMD). RTMD collects over 800 million Medicare Fee-for-Service paid claims annually from 38 states and the District of Columbia, and allows for searching of over 9 billion historical claims.In response to the “Two-Midnight” Policy, RTMD has available in their suite of Inpatient Hospital reports a One Day Stay Report. To give you a true picture of your “at risk” volume, this report excludes claims with a discharge status for Expired (20), left against medical advice (07), hospice (50 & 51) and /or were transferred to another Acute care facility (02). This report enables a hospital to view one day stay paid claims data by DRG and Physician to direct where audits should be focused. For further information on all that RTMD has to offer you can visit their website at www.rtmd.org.Article by Beth CobbBeth Cobb, RN, BSN, ACM, CCDS, is the Manager of Clinical Analytics at Medical Management Plus, Inc.  Beth has over twenty-five years of experience in healthcare including eleven years in Case Management at a large multi-facility health system. 
In her current position, Beth is a principle writer for MMP’s Wednesday@One weekly e-newsletter, an active member of our HIPAA Compliance Committee, MMP’s Education Department Program Director and co-developer of MMP’s proprietary Compliance Risk Assessment (CRA) Tool. You may contact Beth at This email address is being protected from spambots. You need JavaScript enabled to view it..
This material was compiled to share information.  MMP, Inc. is not offering legal advice.  Every reasonable effort has been taken to ensure the information is accurate and useful.  

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